Interpreting tax treaties in the “real world”
Published Date: 17 Oct 2023
It is well understood that a tax treaty should be interpreted in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose. It is equally understood that one of the main purposes of a tax treaty is the avoidance of double taxation, in which the foreign income tax offset article plays a pivotal role. That interpretational principle and the goal of avoiding double taxation have proven to be difficult to apply when attempting to resolve treaty-based problems in practice. The purpose of this article is to highlight these complexities by surveying three decisions from the United Kingdom (Fowler), Australia (Burton) and the United States (Toulouse). These cases illustrate the difficulties in interpreting and applying treaties in practice, and that the purpose of avoiding double taxation is not always absolute, despite the conviction by the judges in achieving that end. The relationship between domestic law and tax treaties is also examined, as this is critical to the problem-solving process.
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- Published By: Norman Hanna
- Published On:17 Oct 2023
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